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International Insolvency Treaty: The Conversation Is Happening

wallstreetBy Joseph Checkler
October 23, 2014

International treaties take years to complete as it is, so imagine the complexities at play in a hypothetical international insolvency treaty. But at least people are starting to talk about it.

On Friday, at the International Global Restructuring Organization’s annual conference in Modena, Italy, Chief New York Bankruptcy Judge Cecelia Morris will speak about the bankruptcy of the city of Detroit, insolvency risk in Puerto Rico and the ongoing problems in Argentina. Judge Morris told Bankruptcy Beat that while formal international insolvency agreements related to sovereign states may be a few years off, getting the restructuring experts in the same room as the financial players is a huge part of moving closer.

“Financial people want to know that they’re protected,” Judge Morris said.

The U.S. is of course a long way ahead of many countries in terms of corporate restructuring, and even has Chapter 15 of the Bankruptcy Code in place for foreign companies with U.S. interests. Educating people in other countries on working with a group of creditors, especially when politics are involved, can be difficult.

“It’s having to overcome that feeling of lack of control,” Judge Morris said. People who aren’t as familiar with formal restructuring proceedings can be “scared of creditors and their powers,” she added.

The judge’s afternoon session will be followed by another lesson: a speech about the Detroit bankruptcy and the new business opportunities it has created by the city’s emergency manager, Kevyn Orr. Judge Morris said she expects Mr. Orr to be able to give attendees a “real perspective” on what to do with an insolvent municipality or country. Then, a group of Italian judges will have a panel discussion on protection for creditors.

Judge Morris likens a sovereign state’s insolvency to the U.S. railroads after the Civil War. Because the railroads couldn’t be broken up piecemeal, they were put into federal receivership and run by the government.Just like you really can’t liquidate a railroad, Judge Morris said, “You can’t liquidate a government.”

Bankruptcy Professional News Makers


October 23, 2014
Chief Judge Morris Scheduled to Address GRO

U.S. Bankruptcy Court Chief Judge Cecelia G. Morris will address the Global Restructuring Organization (GRO) Association’s annual Global Restructuring Conference in Modena, Italy about the need for an international framework for sovereign insolvency situations. This year’s conference will focus on growth and investments. Chief Judge Morris’ presentation, entitled “The Detroit Default, the Risk of Insolvency in Puerto Rico and the Argentinean Issue, addresses implications for investors and governments. Chief Judge Morris is one of the founders of GRO, a European restructuring industry group that aims to start a global conversation about how to deal with sovereign debt. Kevyn Orr, Emergency Manager of the City of Detroit and former Jones Day Partner, will also speak. The GRO’s mission is to foster research and discussion of the main topics related to business growth and development, crisis, restructuring processes and the role of the several players involved in the value chain: banks, judges, entrepreneurs and managers, practitioners, advisory firms, law firms, universities, etc. The organization also strives to compare legal options and best practices adopted in other countries.

Restructuring pros envision global process for sovereign workouts

By Nick Brown
Bankruptcy & Restructuring Correspondent, Reuters

REUTERS October 14 2014
Thomson Reuters

(Reuters) – Imagine a global authority, akin to the World Bank, overseeing an internationally recognized restructuring process
for sovereign debtors that looks to reproduce the experience of Detroit and avoid the pain suffered by Argentina.
That’s the vision of the Global Restructuring Organization (GRO), a European restructuring industry group that aims to start a
global conversation about how to deal with sovereign debt, according to Bankruptcy Judge Cecelia Morris, one of the group’s

Morris, the chief judge of the U.S. Bankruptcy Court for the Southern District of New York, said in an interview with Reuters
that recent developments in Argentina show the challenges of overhauling sovereign debt without a formal system.
“When a sovereign is in stress, the options are to do nothing and see how it plays out, which sounds horrible, or do what
Argentina did, to try to restructure with no judicial umbrella,” said Morris, whose court handles many of the most complex
U.S. bankruptcy cases.
Morris is speaking at GRO’s annual conference in Modena, Italy, later this month. It’s the second time the group has held the
conference, which its organizers hope will become the “Davos of restructuring,” Morris said.
The organization was founded by its current president, Antonio Tullio, a restructuring expert and professor at the University
of Modena, Italy. Tullio could not be immediately reached on Monday.
Among Morris’ fellow speakers will be Kevyn Orr, the former Jones Day partner and emergency manager tapped to lead Detroit
through its massive Chapter 9 bankruptcy.
While Detroit is not a sovereign, its largely consensual reorganization stands as evidence that politically charged government
workouts can be achieved if procedures exist to foster a negotiation, Morris said.
“You at least have to have a structure where everyone has the opportunity to be heard,” she said.
In Puerto Rico, lawmakers and lawyers this year passed a law modeled after U.S.-style bankruptcy that would allow the
territory’s public agencies to restructure their debt, though it is being challenged by creditors as unconstitutional.
“Since we have the reality of Argentina, Puerto Rico is wisely trying to find a way to have a structure,” the judge said.
Argentina, without the benefit of a restructuring mechanism, tried to cut its debt by offering haircuts in 2005 and 2010 to
holders of $82 billion in defaulted bonds. Most creditors accepted the offer, but holdouts led by Elliott Management successfully
petitioned a New York court to rule that they have a right to full payment.

Informativa estesa Ultimo aggiornamento: maggio 2015 Questa informativa estesa sulla privacy è stata redatta in base a quanto previsto dall’art. 4 del Provvedimento Generale n. 229 dell’8 maggio 2014 emanato dal Garante per la protezione dei dati personali e pubblicato sulla G.U. n. 126 del 3 giugno …
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